Fund-Firm Stocks Outpace Profits

Earnings Drop Is Expected,
Though Shares Have Risen

When publicly traded asset-management firms report results later this month, profits for the latest quarter are unlikely to keep pace with sharp gains in their stock prices.

Despite strong stock and bond markets in the quarter, many firms will report profit declines compared with the year-earlier period. Meanwhile, their share prices rose more than 25%, on average, during the second quarter, as investors lay ambitious bets that the bear market has faded and lean days for money managers are over. Although earnings...